Following are some of the advantages of a Life Insurance Policy:
1. Financial Security
Life Insurance provides financial security. When the breadwinner of a family dies the life insurance policy is a help to the family. They can make use of the funds paid by the insurance company to meet their Individual and family’s needs who take up a life insurance policy have to pay premiums. Therefore they will naturally be forced to give sufficient funds for this purpose. This practice encourages thrift and also helps them to plan for some productive schemes.
Life Insurance Policies also help people to take care of their families in case of retirements. This can come as a great relief especially if the person who retires does not have alternative sources of income to take care of his family.
2. Helps to diverts States Resources for Other Purpose
One important duty of the governments in any country is to take care of the old and dependent population. The state also allocates funds for this purpose. With the increasing awareness of insurance the governments can be assured of spending less for the old. As a result they can concentrate on strong issues and problems in the society.
3. Facilitates Economic Movements
Life insurance companies collect premiums from various investors. They are thus able to gather large funds. This money is used to finance trade and development activities. Finally production of goods and services will increase and the economy of the nation will be improved.
4. Helps to Avail Tax Exemptions
The policy holders are allowed to claim income tax exemptions for paying the premiums. The amount and the level to which they are allowed depends on other factors like the persons income and if the insurer is a private player or run by the state. This provision will indirectly tempt people to invest in insurance and attain a mutual benefit of tax exemption and providing security as well.
Since universal life insurance is a long term investment it is not advised to borrow money either by loans or through surrender values as they reduce your policy amount. In case of emergency needs you may still consider them if you are promptly able to repay them with interests if any so that it does not affect your policy.